It has not been a week of progress for Palestinian officials. The reconciliation talks between Fatah and Hamas have failed to show any signs of reconciling, and Yasser Abed Rabbo, Secretary-General of Palestine Liberation Organization (PLO), told reporters Sunday that he and his colleagues were in the dark on other important matters:

The Palestinian side is unaware of the details of the talks between the Israeli side and the Americans concerning finding a middle-ground form over freezing settlements. Once we receive an official American response, the Palestinian leadership would study it.

Beyond this feigned surprise, it is obvious that Ramallah is not confident with the proposal to West Jerusalem.

Fatah and Hamas Reunification Talks: On Sunday, Hamas announced that it reached an agreement with its rival Fatah party to hold a meeting next week. The two groups were supposed to mee last week in Damascus, but tension between Syria's President Bashar Assad and Palestinian Authority leader Mahmoud Abbas led to a cancellation, followed by a series of arrests by the rival parties in the Gaza and West Bank.

Though next week's venue is yet be declared, Salah Bardaweel, a Hamas legislator and spokesman in the Gaza Strip, said he did not rule out the possibility that the meeting would still be held in the Syrian capital:

Fatah leaders should not waste their time searching for similarities in the political platforms of Hamas and Fatah. The only thing we could have in common is not recognizing Israel’s existence.

In response, Osama Qawasmeh, a Fatah spokesman in the West Bank, said that Hamas was ready to recognize Israel’s existence if a Palestinian state were to be established in the entire West Bank, Gaza Strip, and eastern Jerusalem.

Netanyahu's bottom line: due to Israel's security interests, West Jerusalem is not going to accept the demand to extend the freeze of settlements in the West Bank for another two months. If Palestinians want to have a "genuine" peace, then they have to give up all conditions on the final status talks and sit down at the negotiation table.

Meanwhile, Palestinians discussing the approach to the UN are debating whether Ramallah can seek recognition of pre-1967 borders borders and the immediate evacuation of Jewish settlers.

With Israeli Prime Minister Benjamin Netanyahu approving plans to build 238 new homes in East Jerusalem and parts of the West Bank, French President Nicholas Sarkozy’s initiative for direct Israel-Palestine talks has fallen through. The planned peace summit, due to be held Friday, is indefinitely postponed. "We are looking for a new date that works for everybody, although there is nothing firm scheduled yet," an Israeli government official told Reuters.

Washington and Paris said that they were “disappointed” by the decision. In response, the Israeli Prime Minister’s Office said: “We have already said in the past that there is no longer a settlement freeze in Jerusalem. Regarding the relationship with the United States, they received notification of the plan [for the new homes] before we announced it.”

Moroccan King Mohammed VI wrote Israeli President Shimon Peres, was supposed to represent Israel in World Economic Forum, that their meeting was impossible at the moment. So Peres has canceled his trip.

Amidst Israel-Palestine talks and the tension of the issue of Jewish settlements in East Jerusalem and the West Bank, Haaretz reports:

Prime Minister Benjamin Netanyahu has approved tenders for the construction of 240 new housing units in areas of Jerusalem across the Green Line, Israeli media sources reported on Friday.

The Housing and Construction Ministry, along with the Israel Lands Administration, released its list of 3,500 newly approved tenders set for construction across the country.

The list includes residential buildings in the Jerusalem neighborhoods of Pisgat Ze'ev and Ramot. While both neighborhoods are technically set in the northern part of the city, they are considered East Jerusalem due to their location east of the Green Line.

Let's go back to Israeli Prime Minister Benjamin Netanyahu's speech in the Knesset on Monday, looking beyond his offer of an extended freeze on Jewish settlements in the West Bank in return for the recognition of Israel as a Jewish state by the Palestinian Authority.

For Netanyahu, the word "nation" is defined not merely through ethnicity but also through a broader conception which includes religion. In that conception, Israel is "the best nation-state" in terms of individual and minority rights. So, given that Israel is the best, there is no possibility that a "Jewish state" will fail to support the framework of democracy.

Returning his vision to the negotiating table, Netanyahu accused Palestinians of wasting time during the moratorium on settlement construction, carrying out their hidden agenda by teaching their children that there is no Jewish state. However, Israel extends its hand once more:

There is no doubt that such a move by the Palestinian Authority [acknowledging the Jewish state] would serve as a trust-building step, one thatwould open up a new horizon of hope and trust among broad sections of the Israeli public who, in light of the events of the past decade, have lost their confidence in the Palestinian’s desire to end the conflict.

As Israel's Knesset reconvened after a three-month break, Prime Minister Benjamin Netanyahu offered this proposal to the Palestinians: Israel is ready to extend the moratorium on settlement expansion in return for Palestinian recognition of Israel as a "Jewish state".

The Palestinian response was clear: "the issue of the Jewishness of the state has nothing to do with the matter."

And the Americans? From thousands of miles away, they could only give a general, somewhat tangled response: "U.S. policy has been consistent. Both President Obama and Secretary Clinton are committed to Israel’s democracy as a Jewish state," a State Department official told Haaretz.

Prime Minister Netanyahu, less than 72 hours after his Cabinet mandated a loyalty oath for non-Jews who want to be Israeli citizens, both plays to his domestic gallery and puts the onus back on the Palestinian Authority. The prime issue is no longer Jewish settlements; instead, it is this challenge: you want limits on our expansion in the West Bank, then you must declare, "We Accept Israel as a Jewish State."

On Friday, Arab League ministers endorsed the call of Palestinian Authority leader Mamoud Abbas' call to end direct talks unless Israel agrees to another freeze on West Bank settlements.

The Arab ministers said they would meet again in a month to study alternatives and decide on next steps, giving the Obama Administration more time to broker a compromise on renewal of the talks. The Arab delegates want to see a clear path forward after the November Congressional elections in the US.

The Palestinian Authority has still not made a commitment, despite Mahmoud Abbas' declaration that he is ready to leave the negotiating table; given the Arab League outcome, the PA may not do so until November. However, the position seems clear. Unless Israel agrees to a two-month extension on the settlement freeze, we are back to indirect talks.

For the moment, the Arab representatives have saved Barack Obama's face. But Washington, rather than just sending out another set of envoys, needs to spend some time in serious consideration of major steps. Abbas told Arab leaders that he may seek US recognition for a Palestinian state if Israel does not offer a response on settlements. Alternatively, according to sources close to the PA leadership, Abbas told U.S. envoy George Mitchell that he will resign if there is no movement.

Palestinian President Mahmoud Abbas informed U.S. envoy George Mitchell last week that the renewal of settlement construction will not only bring about the collapse of peace talks but it will also induce his resignation from the post of Palestinian Authority president.

According to Palestinian sources close to the PA leadership, Abbas told Mitchell of his plans during their last meeting together.

Abbas's resignation means the dismantling of the Palestinian Authority, since it was agreed inside the government that no one from the leadership of Fatah will step up to replace Abbas as president, and no new elections will be held.

In a conversation he held last week in his plane with a reporter, Abbas said "this is the last time that you will fly with me while I am president of the PA."

While Washington has denied that President Obama sent a letter to Israeli Prime Minister Benjamin Netanyahu giving assurances in return for an extension of the moratorium on settlement expansion in the West Bank, the London-based newspaper Asharq al-Awsat quoted Israeli officials on Monday that Netanyahu has agreed to extend Israel's freeze for 60 days.

According to rumours, Obama's offer included a continued Israel Defense Forces presence in the Jordan Valley, continued US political and military support with an annual increase of $3 billion, a commitment to veto any anti-Israel UN Security Council resolution in the next year, an agreement not to ask for any more extensions of the freeze, with that the fate of the settlements dealt with only as part of a final status agreement with the Palestinians, a series of guarantees to prevent the smuggling of weapons and missiles into a Palestinian state, and a comprehensive regional defense pact for protection from Iran.

At a meeting of Likud ministers, Netanyahu hinted at a freeze extension, saying there were "a lot of reports on the subject, most of which are wrong, and we can't deny or correct everything". He added: "Now there is interest in continuing the peace negotiations... Peace is a vital interest for the State of Israel."